Rightscorp’s service poised to become the online copyright monetization of entertainment

As of late, Rightscorp Inc. Digital Copyright Protection, a provider of copyright monetization for record labels and film companies across the globe, has gained acceptance in the legal, technology and entertainment industries by addressing the flaws in the ISP’s competing six strikes system.

Now, Rightscorp has unveiled brand new technology that could flood the Internet with millions of notices to copyright infringers, according to Ars Technica. The strategy is based on telling ISPs that they will face a high-stakes copyright lawsuit if they don't forward the notices that Rightscorp creates. If ISPs agree to forward Rightscorp's notices and the users get notices that they could be liable for $150,000 in damages unless they click on a provided link and agree to settle their case at a very low price.

According to Rightscorp COO Robert Steele, asking for $20 per infringement is a fair way to create a deterrent. The company hopes to make the cost of infringement equal to a standard traffic ticket, while still keeping the threat of statutory damages. "Entertainers don't want to do that very often," said Steele. "They want to make people happy. For most people, a $10,000 judgment is a really tough thing. We're giving an opportunity for people to resolve the matter and recoup some loss to the creative, for a relatively small amount of money."

The company believes ISPs are obligated to forward their notices under the Digital Millennium Copyright Act (DMCA) if they want the "safe harbor" against lawsuits offered by that law. Rightscorp is on pace to blow that record away, having collected more than $188,000 in just the first quarter. Since Rightscorp splits its settlement cash 50/50 with its clients, those numbers mean that Internet users paid up almost $750,000 last year. Generally, attempts to enforce Internet copyrights on a wide scale haven't been profitable.

“We're holding big American corporations accountable for something they are participating in that hurts people," explained Steele. "We need the moral high ground."

So far, the company has settled with 72,000 users who they say broke copyright laws, and it sent notices to hundreds of thousands, if not millions, of others. On a recent call with investors, Rightscorp CEO Christopher Sabec said the company is working with more than 70 ISPs. "Just like Google has a crawler, we have a crawler," Steele explained. "It crawls the entire world, all the file-sharing networks. It finds all of the different seeders that are giving away our clients' products for free, all day long."

The 'seeders' that Rightscorp is looking for are IP addresses uploading pieces of files through BitTorrent. IP addresses change over time, and that's where Rightscorp's trick kicks in. Steele said his company has a proprietary method of identifying particular users, without ISP cooperation, even when IP addresses get rotated over time. Faced with evidence, the ISPs are legally obligated to take action, up to and including cutting off Internet access. Under the DMCA, that's what those companies must do if they want to keep their "safe harbor" from copyright lawsuits.

Rightscorp creates notices for every infringement and sends the notices to every ISP. Steele said that when he let ISPs know that Rightscorp had such ability, they didn't believe him. Once the company showed them what they could do, they saw that's potentially opening them up to this liability. The company puts the data about what repeat infringers are up to in a Web-based "dashboard," where it can be looked at by both Rightscorp's copyright owner clients as well as ISPs. The system puts Rightscorp ahead of other companies using threats to do large-scale copyright enforcement,. The ability to identify with certainty repeat infringers makes Rightscorp "the only company to have legal leverage with ISPs, compelling the ISP to deliver settlement notices by leveraging the DMCA," according to the company.

Without ISPs going along with its program, Rightscorp doesn't have a business. "Graduated-response style interdiction is too costly to scale to any significant portion of total infringements and yields little or no results," the company stated in its annual financial statement. "ISPs have no incentive to participate in any meaningful way without copyright holders sending them notices."

The company relies on the threat of a lawsuit, but that seems unlikely to materialize. The "six strikes" regime itself suggests that ISPs and most entertainment companies are interested in détente, not brinksmanship. Rightscorp's interpretation of what the DMCA requires is open to debate. The law does require terminating the accounts of "repeat infringers," but there's a lot of leeway in how that might get done.

In the future, the company hopes to get more ISPs to comply and it will expect more of those that are already cooperating, according to Steele. Ultimately, Rightscorp is hoping for a scenario in which the repeat infringers it identifies aren't just notified by e-mail. Instead, Steele hopes to see those users re-directed to a Rightscorp notice right at the moment they open their Web browsers.

Contributing Author

Amanda Ciccatelli

Amanda G. Ciccatelli is a Contributing Writer for InsideCounsel, where she covers the patent litigation space. Amanda earned a B.A. in Communications and Journalism from...